RavPratapSingh

Tax Residency Certificates Cannot be Questioned: ITAT Delhi Pronounces Two Similar Decisions 

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The Income Tax Appellate Tribunal (‘ITAT’), New Delhi pronounced two decisions on 10 and 11 August 2023 and in both of them it reiterated one of the core observations of Supreme Court in the Azadi Bachao Andolancase[1], i.e., Indian Revenue officials cannot go beyond behind the Tax Residency Certificate (‘TRC’) issued by competent authorities of another jurisdiction. Further, the ITAT held that mere allegations of tax evasion and use of conduit companies are not sufficient to deny an assessee benefits under the Double Taxation Avoidance Agreement (‘DTAA’) unless the allegations are backed by cogent evidence. 

Introduction

In the Sarva Capital case[2], the issue before the ITAT was taxability or otherwise of capital gains from sale of equity shares under Article 13(4) of the Indo-Mauritius DTAA. The assessee was a non-resident corporate entity incorporated under the laws of Mauritius and a tax resident of Mauritius. During its business, assessee purchased equity shares in Indian companies and in the assessment year in question sold those equity shares and made capital gains. The assessee offered the income from sale of equity shares as capital gains but claimed exemption under Article 13(4) of the Indo-Mauritius DTAA. 

In the Sarva Capital case, the Assessing Officer denied assessee benefits under DTAA by stating various reasons which inter alia included that tax residency certificate issued by Mauritius is not sufficient to establish its residency if the substance proves otherwise. Additionally, the Assessing Officer argued that the assessee was not the beneficial owner of the income, it was just a conduit and had no commercial rationale for incorporation in Mauritius to argue that the substance proves that the assessee was incorporated in Mauritius only as part of a tax avoidance arrangement and thus was not entitled to benefits under the DTAA.    

In a similar set of facts, in the Leapfrog Financial case[3], the ITAT had to adjudicate if the assessee was entitled to benefit of Indo-Mauritius DTAA for income from capital gains derived from sale of shares. The assessee was a non-resident corporate entity incorporated under the laws of Mauritius and a tax resident of Mauritius. The assessee sold certain unlisted shares of a company and claimed that the resultant long-term and short-term capital gains were exempt from taxation under Article 13(4) of the Indo-Mauritius DTAA. 

And just like in the Sarva Capital case, in the Leapfrog Financial case too, the Assessing Officer denied the assessee benefit of tax exemption under the Indo-Mauritius DTAA by claiming that the assessee had been interposed as an entity only for the purpose of deriving benefits under Indo-Mauritius DTAA and for tax avoidance purposes. The Assessing Officer applied the doctrine of form over substance to deny assessee tax benefits under the DTAA and proceeded to tax it under domestic law. 

Against decision of the Assessing Officer in each of the cases, the assessees approached the ITAT Delhi which overruled the Assessing Officers in both cases to decide in favor of the assessees. 

Tax Evasion Allegations and Tax Residency Certificate 

In the Sarva Capital case, while deciding the residency status of the assessee, the ITAT relied on the Azadi Bachao case and the recent decision of the Delhi High Court in Blackstone Capital case[4] to reiterate that tax authorities in India cannot go behind the tax residency certificate issue by competent tax authorities of other jurisdictions and that the tax residency certificate is sufficient to claim not only legal and residential ownership but also treaty benefits. The ITAT concluded that the Assessing Officer committed a ‘fundamental error’ in denying DTAA benefits to the assessee despite the fact that the assessee possessed a valid tax residency certificate. (para 15)

 In the Leapfrog Financial case, the ITAT made similar observations and stated that Indian tax authorities cannot go beyond the tax residency certificate issued by another jurisdiction. It cited observations of the Supreme Court in the Azadi Bachao Andolan case to conclude that Revenue authorities cannot question the assessee’s residential status and entitlement to treaty benefits. (para 16) In this case, the ITAT specifically questioned the Assessing Officer’s allegations that the assessee was a conduit company and noted that despite making such allegations there is nothing on record to show the Assessing Officer invoked provisions under Chapter XA, i.e., GAAR provisions of the IT Act, 1961. The ITAT concluded:

Thus, in our view, the reasonings of the Assessing Officer to treat the assessee as a shell/conduit company to deny the benefits under India Mauritius tax treaty is without any substance as they are not backed by any credible evidence. (para 13)  

Conclusion 

 The above discussed ITAT Delhi decisions reiterate a fundamental aspect of international tax jurisprudence that was unequivocally laid down by the Supreme Court in the Azadi Bachao Andolan case, i.e., Indian tax authorities cannot question the veracity and authenticity of the tax residency certificate issued by competent authorities of other jurisdictions. While there is little to find fault with the ITAT decisions on this point, the fact that Assessing Officers can and continue to ignore the ratio of Azadi Bachao Andolan case in their attempt to deny DTAA benefits to assessees is not a great example of efficient and rigorous tax governance. And, as the ITAT rightly pointed out in the Leapfrog Financial case, if there is merit of allegations of tax avoidance by the assessee, then the Assessing Officer should not hesitate to apply GAAR provisions. Else, allegations of tax avoidance and that the Mauritian company of the assessee is used as a conduit for investments are merely empty rhetoric and not specific allegations backed by concrete evidence.  

[1] Union of India v Azadi Bachao Andolan (2004) 10 SCC 1. 

[2] Sarva Capital LLC v ACIT ITA No. 2289/Del/2022. 

[3] Leapfrog Financial Inclusion India (II) Ltd v ACIT ITA Nos. 365 & 3666/Del/2023. 

[4] Blackstone Capital Partners (Singapore) VI FDI Three Pte Ltd v ACIT 2023/DHC/000634.  

Delhi High Court Delineates the Scope of Section 67, CGST Act, 2017

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In a recent judgment[1], the Delhi High Court clarified scope and power of the Revenue officials under Section 67, CGST Act, 2017. The High Court adopted a purposive interpretation of the provision to state that the Revenue’s power to seize things cannot be interpreted liberally. Instead, the word ‘things’ used in Section 67 needs to be interpreted by applying the principle of ejusdem generis. And also in interpreting Section 67 it was important to note that it was not a machinery provision for recovery of tax. 

Introduction

The petitioner approached the Delhi High Court praying that the Revenue Department release silver bars, mobile phones and currency seized from its premises. The primary arguments of the petitioner for release of the aforesaid things were: first, that the notice issued under Section 74, CGST Act, 2017 and the demand raised therein did not refer to any of the aforementioned things; second, that since no notice was issued within six months of the seizure of goods, the seized goods were liable to be restored. 

Before delving into the observations of the Delhi High Court, it is important to cite the two relevant sub-sections of Section 67. Section 67(2), CGST Act, 2017 states as follows: 

Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be used for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things: 

Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer: 

Provided further that the documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act. (emphasis added)

And Section 67(7), CGST Act, 2017 states as follows: 

Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the period of six months may, on sufficient cause being shown, be extended by the proper officer for a further period not exceeding six months. 

Decoding Section 67, CGST Act, 2017 

The Delhi High Court observed that Section 67(2) makes it amply clear that only those goods can be seized which are liable for confiscation. Thus, confiscation of documents or books or things is permissible if in the opinion of proper officer they shall be useful or relevant to any proceedings under the Act. The High Court then opined that it would not be apposite to construe the term ‘things’ mutually exclusive from the term ‘goods’ used in Section 67(2) and the term goods relates to goods which are subject matter of supplies that are taxable under the Act. As per the High Court: 

The word ‘goods’ as defined under Sub-section (52) of Section 2 of the Act is in wide terms, but the said term as used in Section 67 of the Act, is qualified with the condition of being liable for confiscation. Thus, only those goods, which are subject matter of or are suspected to be subject matter of evasion of tax. (Para 34) 

The second category – ‘documents or books or things’ – are liable for confiscation only if the proper officer believes that they are useful or relevant to any proceedings under this Act. The latter requirement is clear and express under Section 67, but the question that required adjudication was the scope of the term ‘things’ and by extension the width of the Revenue’s power of seizure. The Delhi High Court adopted a prudent interpretive approach and observed that: 

It is clear from the Scheme of Section 67 of the Act that the word ‘things’ is required to be read, ejusdem generis, with the preceding words ‘documents’ and ‘books’. It is apparent that the legislative intent of using a wide term such as ‘things’ is to include all material that may be informative or contain information, which may be useful for or relevant to any proceedings under the Act. (para 46) 

The Delhi High Court observed that ‘things’ would include devices, computers, etc. that may be used for storing information that may be useful or relevant to the proceedings. The High Court refused the Revenue’s contention that the term ‘things’ should be interpreted to include anything that may or may not be relevant to the proceedings under the Act. There are three distinct reasons for the High Court’s restrictive interpretation of the term ‘things’: first, the rule of ejusdem generis; second, the context of Section 67(2) that requires the proper officer to only confiscate things that are relevant or useful for proceedings under the Act; third, in the High Court’s own words: 

It is necessary to bear in mind that power of search and seizure is a drastic power; it is invasive of the rights of a taxpayer and his private space. Conferring of unguided or unbridled power of this nature would fall foul of the constitutional guarantees. It necessarily follows that such power must be read as circumscribed by the guidelines that qualify the exercise of such power, and the intended purpose for which it has been granted. (para 47)

The purposive interpretation of Section 67 led the Delhi High Court to conclude that even if the petitioner could not provide any evidence of purchase of silver bars or account for the cash in his possession, the same is not liable to be seized under Section 67(2), CGST Act, 2017. The High Court observed that seizure of unaccounted wealth is covered by the Income Tax Act, 1961. While Section 67 is merely a compliance provision aimed to aid the proceedings under the CGST Act, 2017 and the legislative intent behind Section 67 is clear: it does not permit seizure of currency or valuable assets merely on the ground that they represent unaccounted wealth.          

Conclusion         

The Delhi High Court’s impugned judgment is a good example of careful, strict, and purposive interpretation of the provisions of a tax statute. The provision in question – Section 67, CGST Act, 2017 – provides expansive and intrusive powers to the revenue officers to seize goods and other relevant documents, and it was crucial to underline the said powers are not without limits. The High Court carefully underscored the intent of the provision, its context and the limitations in-built in the provision to clearly decide that the confiscatory and seizure powers need to be exercised with proper caution and not in an unbridled manner. The judgment, if adhered to in true spirit, will be effective in reigning the Revenue’s certain adversarial and intrusive actions that tend to cross the statutory limits.  

[1] Deepak Khandelwal v Commissioner of CGST, Delhi West & Anr (2023) 8 TMI 1263. 

Patna High Court Opines on ITC Claims: Interprets Section 16 of CGST Act, 2017 Strictly

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In a recent judgment[1], the Patna High Court engaged with the issue of whether a claim for Input Tax Credit (‘ITC’) is sustainable when the purchasing dealer has made the tax payment to the seller, but the latter does not pay tax to the State. The issue of non-payment of tax by the seller and its impact on purchaser’s ITC claims has arisen frequently under pre-GST and GST regime, with no clear resolution. Recently, the Calcutta High Court – where issue of GST returns was central – opined that the Revenue should first proceed against the seller instead of reversing the ITC of purchaser. In the impugned case, the Patna High Court adopted a different approach where the ingredients of Section 16, CGST Act, 2017[2] were central in deciding the impugned case. 

Introduction 

The purchasing dealer claimed that the seller has not paid tax to the State despite the former making the payment to the latter. As per the purchaser, the liability of purchaser stood satisfied on payment of tax to the seller and the State seeking to recover the said tax from the purchaser would amount to double taxation and diluting the rationale of ITC, i.e., prevention of cascading effect of taxes. The State, on the other hand, argued that the conditions prescribed in Section 16, CGST Act, 2017 need to be satisfied for a taxpayer to claim ITC successfully.

The purchasing dealer tried to argue that the Supreme Court’s observations in ECom Gill Coffee case[3] that the purchaser had to prove ‘prove beyond doubt’ the genuineness of transaction in question to claim ITC was inapplicable in the impugned case since the said case was decided under the KVAT Act. The Patna High Court agreed with the argument but noted that the inapplicability of the ECom Gill Coffee case would still not absolve the dealer of the requirement under Section 16(2)(c) which requires payment of tax as a pre-condition for successfully claiming ITC.

Patna High Court Mandates Compliance with Section 16 

The Patna High Court while emphasizing that unless the purchaser satisfies the conditions prescribed under Section 16, cannot successfully claim ITC made two observations that are important to highlight as to how Courts struggle to categorise ITC. For example, the High Court first observed that the condition under Section 16(2)(c) requiring payment of tax via cash or ITC is a burden:

This in effect is a burden of proof cast on the purchasing dealer who claims Input Tax Credit, which is a right created under statute; sustained only under the specific terms of the statute. (para 10) (emphasis added)   

In the following paragraph, the Patna High Court observed that ITC was a benefit conferred by the statute: 

Necessarily, the conditions for such availment of credit has to be scrupulously followed failing which there can be no benefit conferred on the assessee. The benefit is one conferred by the statute and if the conditions prescribed in the statute are not complied; no benefit flows to the claimant. (para 11) (emphasis added) 

 The prima facie effect of observations in the above paragraphs is that ITC is both a right created under the statute and a benefit conferred by the statute. In my opinion, it is important to categorise it one and unambiguously so; it would determine the extent and nature of conditions can be imposed on taxpayers before they can successfully claim ITC. Courts through casual remarks on the nature of ITC, such as in the impugned case, only add confusion instead of conceptual clarity. 

Conclusion 

Nonetheless, the Patna High Court was categorical in conclusion that ITC postulates that there should be credit in ledger of the purchasing dealer and the said credit can only arise once the seller has paid the tax to the State. Mere production of invoices by the purchaser is not sufficient to claim ITC. Strangely, though the High Court noted that purchaser and seller have an ‘independent contract’ without junction of the Government. But it nonetheless noted that the purchaser’s claim of ITC is dependent on seller paying the tax, a statutory condition under Section 16(2)(c). In other words, the purchaser must either ensure that the seller fulfils its statutory obligation of paying tax to the State or be at the mercy of seller. Because the purchaser cannot successfully claim ITC until the seller pays the tax. Thus, it can also be said that Section 16 is an in-built condition in the purchaser-seller ‘independent contract’ for the purchaser to claim ITC. 

While the State claiming that conditions of Section 16 need to be strictly fulfilled for a purchaser to claim ITC is valid, what is unsettling and legally indeterminate are two things: first, if the State can impose such a statutory condition? The answer to this question would be partially supplied once we have judicial clarity on whether ITC is a right or a concession, for in the latter case such onerous conditions could be justified; second, it is unclear if the seller acts an agent of the State or purchaser once it collects the tax? In my opinion, only in the latter case is it defensible to make the purchaser’s claim of ITC dependent on seller paying the tax. Otherwise, it is not far-fetched to say that conditions under Section 16 are aligned to the State’s interest rather than a coherent conceptual approach towards transactions and the parties that generate GST.      

[1] M/s Aastha Enterprises v The State of Bihar 2023 LiveLaw (Pat) 96. 

[2] This provision is pari materia with Section 16, Bihar Goods and Services Tax Act, 2017, the impugned provision in this case.

[3] State of Karnataka v M/s Ecom Gill Coffee Trading Private Limited 2023 SCC OnLine SC 248. 

Supreme Court Reiterates Non-Obstante Clause of Section 529A, Companies Act, 1956

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In a recent judgment[1], the Supreme Court opined on the priority to be accorded to custom authorities vis-à-vis secured creditors under the Companies Act, 1956. It accorded due deference to the overriding nature of Section 529A under which tax due by a company under winding up is not to be the foremost payment. While the judgment is under the erstwhile Companies Act, 1956 it is important to highlight how a seemingly straightforward issue – ranking of tax dues from a company under the winding up or insolvency process – has a unduly long legacy that continues to simmer under the IBC as well. 

Introduction 

The appeal before the Supreme Court was against an order of the Andhra Pradesh High Court where it held that notwithstanding the winding up order against the impugned company – M/s Sri Vishnupriya Industries Limited – and Sections 529A and 530 of the Companies Act, 1956, the custom authorities have the first right to sell the imported goods and adjust the sale proceeds towards payment of customs duty. The appeal was filed by Industrial Development Bank of India from which the company had sought financial assistance and to which the company had hypothecated movable properties, namely machinery and its components.

The company had imported the machinery and components and on failure to pay the customs duty, an order was passed to detain and sell the said property for satisfaction of the outstanding customs duty. In the meanwhile, an order for winding up of company was passed and the Official Liquidator so appointed requested the custom authorities to hand over the properties of the company which the latter planned to auction for payment of customs duty. The Andhra Pradesh High Court faced with the question as to whether the rights of a secured creditor should have precedence over custom authorities, decided in favor of the latter.    

Interplay of Provisions of Companies Act, 1956

Supreme Court was categorical, and rightly so, in its examination of Section 529A of Companies Act, 1956. It noted that Section 529A enlisted that workmen’s dues and debts of secured creditors shall be paid in preference to all other payments, and the non-obstante clause in the provision made it clear that these payments were to be made in preference to all other payments in the winding up of a company. And all other payments enlisted in Section 530 were to be made subject to the prescription of Section 529A. Supreme Court concluded that it is ‘beyond debate’ that provisions of Section 529A shall prevail of Section 530 of the Companies Act, 1956. (para 11)

The result of this clear and unambiguous position and effect of both provisions, was, in Supreme Court’s own words: 

… IDBI is an overriding preferential creditor under Section 529A of the Companies Act and at best, if the requirements of clause (a) to Section 530(1) of the Companies Act are satisfied, the customs dues would fall under Section 530 of the Companies Act and will be categorized as preferential payment. (para 19) 

The Supreme Court, out of abundant caution, went into the meaning and interpretation of certain phrases used in Section 529A and Section 530, Companies Act, 1956. It went into detail and cited precedents as to what the terms ‘due’ and ‘due and payable’ mean under the provisions. 

The Supreme Court then clarified that as per the law laid down in relevant precedents, such as the Dena Bankcase[2], government dues do not have priority over secured creditors. The principle so enunciated in the Dena Bank case aligned with the Supreme Court’s interpretation and interplay of Section 529A and Section 530 in the impugned case. However, the Supreme Court clarified that the principle laid down in the Dena Bank case must give way to a statutory charge that may be created by an enactment. In the context of impugned case, it meant that the Supreme Court had to examine if Customs Act, 1962 created a first charge for payment of customs duty and if there was a conflict between the Companies Act, 1956 and Customs Act, 1962. Supreme Court’s conclusion on this point was: 

The provisions in the Customs Act do not, in any manner, negate or override the statutory preference in terms of Section 529A of the Companies Act, which treats the secured creditors and the workmen’s dues as overriding preferential creditors; and the government dues limited to debts ‘due and payable’ in the twelve months next before the relevant date, which are to be treated as preferential payments under Section 530 of the Companies Act, but are ranked below overriding preferential payments and have to be paid after the payment has been made in terms of Section 529 and 529A of the Companies Act. Therefore, the prior secured creditors are entitled to enforce their charge, notwithstanding the government dues payable under the Customs Act. (para 24)

The Supreme Court further clarified that the charge created under Section 142A, Customs Act, 1962 protects the rights of third parties under Section 529A, Companies Act, 1956 inter alia of those under Insolvency and Bankruptcy Code, 2016. And that Section 142A, Customs Act, 1962 does not create a first charge on the dues payable under the said legislation.         

Conclusion

While the Supreme Court’s judgment focuses on the interplay of provisions of Companies Act, 1956, its observations in the latter half of the judgment clarify, to some extent, the position of law after the implementation of IBC. The fact that Customs Act, 1962 does not create a statutory charge is an important and correct position of law as it clarifies that tax authorities – at least, customs authorities – are not placed above the preferential creditors. This may prove useful in unfortunate but frequent disputes between tax authorities seeking priority payment of outstanding dues over secured creditors of the company under insolvency, despite that the waterfall mechanism under IBC does not place the tax authorities above the secured creditors.  

[1] Industrial Development Bank of India v Superintendent of Central Excise and Customs and Others, available at https://main.sci.gov.in/supremecourt/2009/114/114_2009_3_1501_46202_Judgement_18-Aug-2023.pdf (Last accessed on 21 August 2023). 

[2] Dena Bank v Bhikhabhai Prabhudas Parekh & Co and Others (2000) 5 SCC 694. 

Reversal of ITC: Calcutta High Court Opines on Liability of Buyer-Seller & GST Returns

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In a recent judgment[1], the Calcutta High Court gave a detailed opinion on the nature and role of some of the tax returns, specifically, GSTR-2A, that taxpayers are required to file under GST. And in the process provided some clarity on who bears the burden – buyer or supplier – for paying taxes to the State in case of errors in the relevant tax returns.  

Introduction 

The appellant purchased certain goods and services from its supplier and paid GST on the supplies. However, some of the invoices of the supplier were not reflected in GSTR-2A of the appellant for the Financial Year 2017-18. It is important to state here that GSTR-2A is an auto-drafted statement that is generated for each taxpayer based on their supplier’s data and provides the taxpayer ITC-related information. When a taxpayer files their monthly summary under GSTR-3B, it is important for them to reconcile ITC and other data with their GSTR-2A. Thus, any error/mistake in the GSTR-2A generated by a taxpayer’s supplier could affect the ITC claims of a taxpayer.   

In the impugned case, the appellant was served notice for recovery of input tax credit (‘ITC’) availed and was eventually the ITC of the appellant was reversed. The ground for reversal of ITC was mismatch in the taxpayer’s GSTR-2A and GSTR-3B. The appellant defended the mismatch under GSTR-2A with GSTR-3B by arguing that its transactions with the supplier were genuine and were not reflected in GSTR-2A due to the supplier’s error. However, the notice was adjudicated and penalty along with interest were determined under Section 73(10), CGST Act, 2017. The appellant approached the Calcutta High Court against the order with its main grievance being that proceedings cannot be initiated against it without conducting any enquiry or effecting any recovery from the supplier.

In other words, if the supplier had not paid GST to the State – erroneously or otherwise – then the Revenue should proceed against the supplier and not reverse the appellant’s ITC. The issue was of attributing responsibility for the GST on the transactions in question. The Calcutta High Court adjudicated on the issue by inter alia stating the importance and role of the relevant tax returns under GST.    

High Court Adjudicates in Favor of Taxpayer 

The appellant’s arguments were reliant on Section 16, CGST Act, 2017 and CBIC Press Releases dated 4.05.2018 and 18.10.2018. The appellant argued that they had fulfilled all the statutory conditions to avail ITC as prescribed under Section 16(2) and they cited CBIC’s Press Releases to emphasise that GSTR-2A was for the purpose of taxpayer facilitation/information and did not impact the ability of a taxpayer to claim ITC on a self-assessment basis. In other words, as long as the taxpayer was fulfilling the statutory conditions prescribed under Sec 16, CGST Act, 2017 discrepancies in GSTR-2A should not affect its ability to claim ITC.  

The appellant further placed emphasis on Bharti Airtel judgment[2] of the Supreme Court to underline the nature of GSTR-2A and that it was de-linked with GSTR-3B. The Supreme Court in the Bharti Airtel judgment has held that GSTR-2A and the common electronic portal acts as enablers and facilitators for claiming ITC on self-assessment basis and the conditions to claim ITC under Section 16, CGST Act, 2017 were termed as crucial and substantive. Equally crucially, the appellant relied on Arise Limited case[3] where the issue for consideration was whether the purchasing dealer should be made liable for the default committed by selling dealer and the Delhi High Court had held that bona fide purchaser under a transaction with a registered seller should not be made responsible for seller’s default unless collusion between purchaser and seller is established by the Revenue. 

The Calcutta High Court accepted all the arguments of the appellant including the fact that the appellant possessed the invoice and the bank statement to prove that they had bought the goods from the supplier and the transactions in question were genuine transactions. 

Conclusion 

The Calcutta High Court’s judgment wherein it directed the Revenue to first proceed against the supplier and only in exceptional circumstance proceed against the appellant is a welcome development. It only reiterates what should be the default position under GST laws as far tax defaults are concerned. Unless collusion or fraud is established or a prima facie case for the same is made, the Revenue should not deny ITC or reverse ITC of the purchaser in case of tax default by the supplier. This is the desirable position of law and should be the law as followed in practice.     

[1] Suncraft Energy Pvt Ltd v The Assistant Commissioner, State Tax, Ballygunge (2023) 8 TMI 174. 

[2] Union of India v Bharti Airtel Ltd and Ors 2021 SCC OnLine SC 1006. 

[3] Arise India Ltd v Commissioner of Trade and Taxes, Delhi and Ors MANU/DE/3361/2017. 

Bombay High Court Strikes Down FAQ under Vivad se Vishwas Act, 2020

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In a recent judgment[1], the Bombay High Court rejected an interpretation adopted by the Revenue Department which was prejudicial to the assessee. The case concerned answer to a Frequently Asked Question (‘FAQ’) which the High Court struck down as not in accordance with the object of Direct Tax Vivad se Vishwas Act, 2020, a beneficial legislation for assessees.  

Facts 

Assessee had filed an appeal before ITAT under Section 253, IT Act, 1961 on 30 September 2014 which was dismissed on 20 May 2016. The assessee filed a Miscellaneous Application (‘MA 1’) on 17 September 2016 seeking adjudication on grounds 3 and 4 which remained undecided by the ITAT. The ITAT passed an order on 14 May 2019 modifying its earlier order which was given effect to by the Deputy Commissioner of Income Tax. The petitioner then preferred another Miscellaneous Application (‘MA 2’) seeking adjudication of ground 4 which still remained undecided. MA 2 remained pending at the time of filing of petition by the assessee before the Bombay High Court.  

On 17 March 2020, Direct Tax Vivad se Vishwas Act, 2020 (DTVVA, 2020) was passed and petitioner on 30 January 2021 made an application to seek its benefit. However, the petitioner’s application was rejected on the ground that it was not eligible to avail the benefit under DTVVA, 2020.  

Arguments 

The assessee argued that its application under DTVVA, 2020 could not be rejected since MA 2 was pending adjudication at the time of application, and a pending appeal was one of the eligibility conditions under DTVVA, 2020. And the State could not argue that MA 2 was not maintainable; the assessee was in litigation at the time of introduction of DTVVA, 2020 and eligible to receive its benefits. The assessee pressed home the point that MA 2 was filed since one of the grounds  (ground 4 )remained undecided by ITAT, and MA 1 was held to be admissible for want of adjudication on ground 3 and ground 4. Thus, there was no reason to dismiss MA 2 was being infructuous or barred due to res judicata. 

State’s order rejecting the assessee’s application stated that the assessee had applied under DTVVA, 2020 against MA 2 which was filed against the dismissed appeal. The State reasoned that an examination of ITAT’s order reveals that the assessee’s appeal was not dismissed in limine as ITAT had discussed the issue involved. Thus, as per the State, assessee was not eligible to apply for DTVVA, 2020.

Bombay High Court Find in Favor of Assessee

The Bombay High Court noted that MA 2 is pending as a matter of record. And that the High Court cannot proceed on the basis that MA 2 might be rejected. Instead, the High Court observed that it cannot be ignored that MA 1 was decided in favor of the assessee. Thus, MA 2 should be treated as an application that is pending for adjudication on ground 4 which remained undecided in appeal. Having decided this crucial fact, the High Court examined the ‘FAQ’ which formed the basis of the State’s rejection stated above. 

FAQ 61 issued under the DTVVA, 2020 clarifying eligibility criteria stated that: 

61. Whether Miscellaneous Application (MA) pending as on 31st January 2020 will also be covered by the Scheme? 

Ans. If the MA pending on 31st January 2020 is in respect of an appeal which was dismissed in limine (before 31st January 2020) such MA is eligible. Disputed tax will be computed with reference to the appeal which was dismissed. (emphasis added)

The Bombay High Court referred to the objective of DTVVA, 2020, i.e., to reduce pending income tax disputes, generate timely revenue for the Government, and provide certainty to taxpayers. In light of this objective, the High Court noted that the qualifying words ‘in limine’ introduced in FAQ 61 were contrary to the object and reasons of DTVVA, 2020. The High Court cited a slew of precedents to highlight that a beneficial statute must be interpreted to provide the complete remedy which the statute seeks to provide. In view of the same, it struck down FAQ 61 reasoning that DTVVA, 2020 was a beneficial statute and addition of the words ‘in limine’ was adverse to the interests of the assessee and contrary to the objects of DTVVA, 2020. 

Conclusion 

The Bombay High Court’s approach in the impugned judgment is an example of a court carefully examining the issue at hand, and using the relevant jurisprudence to adjudicate in favor of the assessee by providing adequate reasoning. The State’s denial to the assessee’s application under DTVVA, 2020 was based on thin grounds and the High Court was correct in scrutinising the order and striking down the edifice of the State’s order.    

[1] Oerlikon Balzers Coating India (P) Ltd v Union of India 2023 SCC OnLine Bom 1295. 

Compounding Fee is Not Tax

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In a recent judgment[1], the Delhi High Court clarified that merely because appellants paid a compounding fee after initiation of legal proceedings against them, does not permit the State to retain the said amount if there was no legal provision under which the appellants were obligated to make the payment. The High Court clarified that in order to successfully claim the refund of compounding fee, it was not necessary for the appellants to have stated that it was paid under protest.   

Introduction 

The appellants imported fuel dispensing equipment for use at retail outlets in the country but without obtaining registration under the Legal Metrology Act, 2009. The respondents – Director of Legal Metrology and Others – took the view that appellants did not comply with the statutory requirements under Legal Metrology Act, 2009 and initiated proceedings against the appellants. During proceedings, the appellants paid compounding fee to the respondents. 

On examining the issue as to whether appellants need to obtain registration before importing the equipment, a Single Judge of the Delhi High Court held that the appellant was not liable to register under the Legal Metrology Act, 2009. However, the Judge refused to accept the appellant’s plea for refund of the compounding fee reasoning that the payment was not made under coercion, but voluntarily. The judge observed, that at the time of making payment, the appellants did not communicate that they were making the payment under coercion or under protest. 

Decision 

The Division Bench of the Delhi High Court held that it was unable to sustain the conclusions reached by the Single Judge. As per the Division Bench, once it was clear that the appellants were not liable under the Legal Metrology Act, 2009 it was difficult to accept the proposition that they should be held liable to pay the compounding fee.  

The Division Bench concluded: 

We also deem it pertinent to observe that the respondents being “State” cannot be countenanced to retain monies which are otherwise not payable by the appellants under the provisions of the 2009 Act. When viewed in that light, it is evident that the issue of deposit without demur or protest could not have justified the retention of compounding fee. (para 8)

It is evident that the retention of money by the Metrology Department – termed as State – by the Division Bench by viewed as illegal. The Division Bench was clear in stating that a compounding fee was not in the nature of a tax or duty but a payment made to avoid the rigours of a legal proceeding. Payment of compounding fee should not be understood mean acceptance of violation of the statutory provisions or an acceptance of guilt. 

The Division Bench adopted a comparatively more coherent approach in ordering the refund of the compounding fee. If the action of respondents was held to be not violative of the impugned statute, there was little to no reason for disallowing their request to refund the compounding fee paid to thwart legal proceedings initiated under the said statute. Merely not stating that the compounding fee was paid under protest was not a valid ground to deny the refund of compounding fee, and the Single Judge Bench erred in denying the refund.   

[1] Indian Oil Corporation Ltd v Director of Legal Metrology & Ors 2023 LiveLaw (Del) 654. 

Patna High Court Directs Substantive Compliance with Section 129, CGST Act, 2017 

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Short Note

In a concise judgment[1], a Division Bench of the Patna High Court provided relief to a taxpayer who was made liable under Section 129, CGST Act, 2017 for transporting goods on an expired e-way bill. The High Court held that the proper officer levied penalty without application of mind. 

The petitioner was transporting goods without a valid e-way bill. The petitioner argued that since the vehicle broke down it could not travel the State of Bihar before the expiry of the e-way bill. And that the petitioner’s bona fide reason was not considered by the authorities which levied a penalty mechanically. To emphasise the latter point, the petitioner highlighted that the notice and order of penalty were issued on the same date.  The proper officer issued a notice to the petitioner on 28.03.2022 and followed it by levying a penalty on the petitioner under Section 129(3) by an order dated 28.03.2022 itself.

The Revenue, on the other hand, argued that the e-way bill was valid only upto 16.03.2022 while the petitioner’s vehicle was intercepted on 23.03.2022 when the goods were still in movement. The State argued that under Section 129, CGST Act, 2017 the petitioner had a window of 8 hours to renew an expired e-way bill and thus was liable to face penalty for transporting goods accompanied by an expired e-way bill. 

The Patna High Court took cognizance of the fact that the proper officer had issued the notice and order imposing penalty simultaneously. It also noted that the order passed by the proper officer did not record the presence or hearing of the petitioner prior to passing of the order. 

Further, the High Court observed that: 

This Court would find that the notice issued under Section 129(1)(a) was nothing more than an empty formality as no time/opportunity has been allowed pursuant to the notice, and immediately, on the same date, penalty has been recorded under Section 129(3). The determination of penalty under Section 129(3) is, therefore, in contravention of the statutory requirement under Section 129 of the Act. The requisite compliance with principles of natural justice, inherent in Section 129(4) has thus been violated. (para 9)

The order imposing penalty was thus held to be unsustainable and was quashed. The High Court noted that the petitioner’s response to the notice should be considered and an opportunity of being heard should be provided as per the statutory mandate. 

It is important to highlight that Section 129 mandates the proper officer to not only issue a notice to the taxpayer before imposing a penalty, but also provide an opportunity of being heard to the taxpayer before passing an order imposing penalty. In the impugned case, the Patna High Court clearly endorsed that the issuance of notice should not be a mechanical exercise and providing an opportunity of being heard to the taxpayer cannot be dispensed with. Hopefully, the latter will not be adhered to in a mechanical fashion by the Revenue.   

[1] M/S Sangam Wires v The State of Bihar. Available at https://www.livelaw.in/pdf_upload/ca825b59-583c-4d04-995d-6b0436d311ea-481343.pdf

Provisional Attachment under GST: Bombay HC Clarifies Scope of Section 83 

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Introduction 

In a judgment[1] pronounced on 30.06.2023, a Division Bench of the Bombay High Court interpreted the law on provisional attachment under GST. While the law on provisional attachment has been sufficiently elaborated by the Supreme Court in Radha Krishan case[2], High Courts have had to consistently interpret the relevant provisions to remind the Revenue of the limits of its powers of provisional attachment. In the impugned case, the Bombay High Court clarified an obvious point, i.e., the order of provisional attachment expires after one year as stated in Section 83(2), CGST Act, 2017. And a new order needs to be issued after one year to legally continue the provisional attachment. The High Court also clarified scope of the Revenue’s power of provisional attachment, i.e., persons whose property can be attached under Section 83.   

To begin with, the Revenue argued that the petitioner cannot file a writ petition against an order dismissing its objections against provisional attachment. The petitioner, in the impugned case, filed objections against provisional attachment but the same were disposed by an order under Rule 159(5), CGST Rules, 2017. Relying on Radha Krishan case, the Bombay High Court agreed with the petitioner that the order dismissing the petitioner’s objections was not an appealable order and the only remedy available to the petitioner was to invoke writ jurisdiction of the High Court under Article 226 of the Constitution. It therefore admitted the petition dismissing the Revenue’s objections against its maintainability. As regards the merits, there were two issues that the High Court elaborated on, which I discuss below.    

Issue I: Expiry after One Year 

Section 83(2), CGST Act, 2017 provides that an order of provisional attachment passed under Section 83(1) expires after a period of one year. In the impugned case, the order for provisional attachment was passed on 21.04.2022 and ceased to have effect on 21.04.2023. The Revenue issued a letter to the bank on 19.04.2022, with a copy marked to the petitioner informing them about the continuance of the provisional attachment effectuated on 21.04.2022. The Revenue contended that a copy of the order sheet reflected that a fresh order was passed on 21.04.2023, making the provisional attachment valid. The Bombay High Court’s dismissed the Revenue’s contention.

The Bombay High Court observed that the order sheet recorded the date of noting as 21.04.2022 and formed the basis of the first provisional attachment order. There was no fresh order passed by the Revenue on 19.04.2023, which was merely a letter by way of communication to the bank to continue provisional attachment of the bank account. The High Court observed that mere notings in the file cannot constitute a formal order and the latter is a requirement under the law.    

Since no fresh order was passed to provisionally attach the petitioner’s bank account, the Bombay High Court rightly held that there was no provisional attachment of the petitioner’s bank account after 21.04.2023, from any angle. The extension of provisional attachment via communication letter dated 19.04.2023, was quashed.  

Issue II: Attaching Bank Account of Any Other Person  

In a similar writ petition, which was decided alongside the previous petition, the petitioner objected to provisional attachment of their bank account on jurisdictional grounds. The petitioner argued that they were a resident of Chennai and their bank account was also in Chennai and the Maharashtra GST authorities did not have jurisdiction to order provisional attachment of their bank account. The Bombay High Court disagreed with the petitioner and correctly interpreted Section 83. Section 83(1), CGST Act, 2017 states as follows:

Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1-A) of section 122, in such manner as may be prescribed. (emphasis added)

Elaborating on the scope of Section 83(1), the Bombay High Court observed that it contemplated two persons: taxable and any person specified in Section 122(1-A). The High Court observed that Section 122(1-A) provides that any person who is the beneficiary of certain specified transactions shall be liable to penalty of sum equivalent to tax evaded or ITC availed or passed on. The High Court held that Maharashtra GST authorities can exercise their powers under Section 83(1) in respect of person who may not be within their territorial jurisdiction and stated two reasons: 

First, it would lead to a situation where a person who is beneficiary of a transaction involving tax evasion is in a different State other than the one where the transaction occurred, will not be examined by the latter State since he is not a resident there and will not be examined by the State where he is resident since the transaction did not happen in that State. It emphasised on the term ‘any person’ used in Section 122-A and held that the provision does not contemplate that the person should be in the State where the transaction occurred. 

Second, the Bombay High Court held that the ‘context of the legislation’ is vital too. The High Court held that Section 1(2), CGST Act, 2017 states that it shall be operational throughout the country and the Commissioner as defined under Section 2(24) should be understood in light of the said provision. The High Court held that the power of Commissioner under Section 83(1) extends to ‘any person’ and concluded that: 

There cannot be any other reading of the legislative scheme flowing through a conjoint reading of Section 83(2) read with Section 122(1-A) and Section 2(24) of the Act, moreover, a contrary reading of the said provisions would defeat the legislative intention. (para 6) 

Thus, the petitioner’s objection to provisional attachment on grounds of jurisdiction was rejected since the Bombay High Court correctly interpreted the scope of Section 83 read with Section 122(1-A) of CGST Act, 2017.  

Conclusion

While the Bombay High Court’s findings on Issue II were rendered moot because it quashed the communication letter dated 19.04.2023 and 21.04.2023, its observations provide an important insight into the Revenue’s territorial jurisdiction qua provisional attachment. The High Court was not incorrect in referring to GST as a nationwide levy operational throughout the country but the said fact on its own did not offer enough legal force to support an expansive jurisdiction of the Commissioner qua provisional attachment. Similarly, the reliance on legislative mandate and intent was not incorrect and but at the same time was key to provide support to the High Court’s observations about the expansive scope of Section 83. It will be interesting to observe, if the High Court’s observations have any observable effect on the Revenue’s approach towards provisional attachment; a power that the Revenue tends to interpret liberally and invoke more frequently than required.   

[1] Bharat Parihar v State of Maharashtra 2023 (6) TR 7547. 

[2] Radha Krishan Industries v State of Himachal Pradesh (2021) 6 SCC 771.  

Limits of Deeming Fiction: Intermediaries under GST – II

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Constitutionality of Section 13(8)(b) and Section 8(2), IGST Act, 2017

Introduction

As elaborated in the first of this two-part post, the constitutionality of Section 13(8)(b), IGST Act, 2017 has attracted varied judicial opinions that deploy superficial and sub-par reasoning. Nonetheless, a Division Bench of the Bombay High Court delivered a split verdict on the constitutionality of Section 13(8)(b) and referred the issue to a third judge. Justice G.S. Kulkarni in his opinion[1] has adopted a unique perspective towards the issue and in the process arrived at a novel conclusion, whose implications are not entirely clear. The conclusion of Justice Kulkarni is that Section 13(8)(b) and Section 8(2) of IGST Act, 2017 are legal, valid, and constitutional if their operation is confined in their operation to IGST Act only and same cannot be made applicable for levy of tax on services under Central and Maharashtra GST legislations (‘CGST Act’ and ‘MGST Act’ respectively). I examine the reasoning and approach of Justice Kulkarni in the following paragraphs. Please refer to the first part for an introduction to the issue.    

Arguments

The Revenue justified Section 13(8)(b), IGST Act, 2017 by articulating several reasons. The Revenue argued that the place of service for intermediaries was the location of intermediary under the service tax regime as well and a similar legal position has been adopted under GST. Also, it referred to the fact that value addition in case of services by intermediaries happens at the location of intermediary. The Revenue also stated – in my view the real reason for Section 13(8)(b) – that if the location of intermediary was not made the place of service under the impugned provision, then the transaction would have escaped the tax net. (para 13)

The petitioners relied on Article 246A, 269A and 286 of the Constitution to argue that the impugned provision, i.e., Section 13(8)(b), IGST Act, 2017 was violative of the Constitutional limits. The petitioners, for example, argued that by deploying the deeming fiction under Section 13(8)(b), IGST Act, 2017 the Revenue was trying to convert the actual place of supply which was in foreign territory to the place of supplier and tax it as an intra-State supply. And the use of deeming fiction contravened Articles 246A, 269A and 286. The other arguments of the petitioners can be enlisted as follows: the levy of IGST on export of services is de hors the fundamental principle of GST as a destination-based tax, its violates the restrictions imposed by Article 286 which forbid States from levying a tax on transactions which take place in the course of import and the Parliament cannot authorize States to levy tax on export of services by deeming it to be a local supply, the levy is extra-territorial and violative of Article 245. Further, the petitioners also alleged that the levy via Section 13(8)(b) was arbitrary, discriminatory, and violative of Article 14.    

Decision

Justice Kulkarni noted that there is no dispute that the transaction undertaken by taxpayers constitutes an export of service. He agreed with the petitioners and stated that: 

In my opinion, the contention of the petitioners appears to be correct that the transactions in question of the petitioners are in fact a transactions of export of service, as the recipient of service is the foreign principal. The destination/consumption of the services as provided by the petitioners takes place in a foreign land. This completely satisfies the test of “export of service” as defined under Section 2(6) of the IGST Act, also as there is no contra indication that “factually” it can be regarded as either inter-State or intra-State sale of services.(para 60)

Justice Kulkarni relied on the definition of export of services under Section 2(6), IGST Act, 2017 and observed that all the ingredients of were satisfied in the impugned case. Section 2(6), IGST Act, 2017 defines export of services to mean when: (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8. Strictly speaking, the third ingredient, i.e., place of supply of service is not satisfied in the impugned case by virtue of Section 13(8)(b), IGST Act, 2017. However, since that was the centrepiece of the petitioner’s case, accepting it on face value would have prevented engagement with the petitioner’s argument.   

Justice Kulkarni stated that the contention of petitioners is that Section 13(8)(b), IGST Act, 2017 is being read into the Central and State GST legislations, i.e., CGST Act and MGST Act to tax export of services indirectly by treating them as a local supply. He framed the issued as: provisions of IGST Act were being imported into CGST Act and MGST Acts. The framing of the issuing as interplay of two distinct legislations rather than as an issue of legislative competence is crucial. By treating the issue of deeming fiction under Section 13(8)(b), IGST Act, 2017 he was able to address the petitioner’s grievance and yet managed to not situate it completely within the Constitutional context. Thus, Justice Kulkarni engaged with inter-connectedness of various GST legislations as the central issue making the petitioner’s argument of the Parliament’s competence to enact the impugned provision as an allied issue.   

Once Justice Kulkarni framed the issue as discussed above, he elaborated on the different spheres of CGST Act, 2017, IGST Act, 2017 and various State GST legislations. He agreed with the petitioner’s argument that the deeming fiction incorporated in Section 13(8)(b), IGST Act, 2017 would amount to double taxation and linking of two separate transactions. He observed that the commission is subsumed in the transaction that the foreign principal undertakes with Indian importer. And that the transaction between Indian intermediary and foreign principal cannot be understood be part of the transaction foreign principal and Indian importer. Interlinking of the two independent transactions would be contrary to the destination-based character of GST. He noted that if Section 13(8)(b), IGST Act, 2017 would be applied to CGST and MGST Acts, it would ‘in my opinion, it would lead not only to a consequence of double taxation but also to an implausible and illogical effect, in recognizing two independent transactions to be one transaction for the purpose of levy of CGST and MGST as intra-State trade and commerce.’ (para 79)

Developing on the issue of distinct but inter-relatedness of the two transactions and legislations, Justice Kulkarni highlighted that there was a tension in IGST Act, 2017 itself. He specifically cited Section 7(5), IGST Act, 2017 which provides that if supplier is located in India and place of supply is outside India then such supply shall be treated as in the course of inter-State trade or commerce. He observed that there is a dichotomy since on one hand the petitioner’s transaction of export of services is treated as inter-State under Section 7(5) while it is treated as intra-State under Section 13(8(b). The aforesaid comparison and ‘dichotomy’ is not a conclusive reason to not accept the deeming fiction incorporated under Section 13(8(b) since a legislation can incorporate a rule and its exception. Justice Kulkarni was however convinced that operation of both provisions would lead to absurdity and uncertainty in the operation of IGST Act, 2017. (para 82)

Based on the above reasoning Justice Kulkarni concluded that inter-State transactions should be confined to IGST Act and intra-State transactions only to CGST Act and MGST Act. He observed: 

Necessarily transactions which are intra-State transactions and those which are inter- State transactions (trade or commerce) are required to be compartmentalized, so as to be recognized under the separate regimes and without creation of any fictional incongruity in regard to the regimes, they need to be taxed, in the given facts and circumstances. It will be too harsh and not fair to the assessees to suffer any uncertainty in regard to the regimes the assessee’s would be taxed. Such uncertainty is neither conducive to trade or commerce nor of any real benefit to the interest of the revenue. (para 83) 

However, Justice Kulkarni did not hold Section 13(8)(b) and Section 8(2), IGST Act, 2017 to be unconstitutional. Relying on a spate of precedents he observed that if a provision could be read down and made workable to further the intent of legislation, Courts should adopt that path instead of striking down a provision as ultra-vires. And in his opinon the impugned provision could be made workable and reflect legislative intent if its operation was confined solely to IGST Act, 2017 and was not imported into CGST and MGST Act. (paras 84 and 89)   

Conclusion

A straightforward and pithy conclusion of Justice Kulkarni’s opinion is that Section 13(8)(b) and Section 8(2), IGST Act, 2017 is not unconstitutional but its operation has been confined to provisions of IGST Act only and cannot be made applicable to tax on services under CGST and MGST Acts. What does this mean? One immediate implication is that Section 13(8)(b) of IGST Act cannot be used to levy GST on intermediary services provided to a foreign principal by treating their export of services as a local/intra-State supply. This also means that such intermediary services cannot be subjected to IGST since exports are ordinarily speaking, not taxed under the destination-based principle of GST. And Justice Kulkarni has noted expressly that the petitioner’s intermediary services amount to export of services. Any further implications are likely to be revealed in due time as and when the CBIC issues some communication from its end. 

It is important to note that the exclusive domains and compartmentalization that Justice Kulkarni refers to is an appropriate approach to understand the multiple GST legislations, their operation and their respective spheres of operation. Justice Kulkarni through his judgment has brought home the fact that while the entire legislative matrix of GST operates on same fundamental principles, e.g., destination-based tax; they intend to levy tax on different transactions. IGST Act is applicable to inter-State transactions while CGST Act and State GST Acts are applicable on intra-State transactions. Going forward, it would be interesting to watch if the strict compartmentalization advocated by Justice Kulkarni would admit of some exceptions and the circumstances when the dilution of such compartmentalization may be allowed.   

Finally, it is worth noting that the opinion of Justice Kulkarni is a satisfactory resolution to the taxation of intermediary services and their treatment as intra-State supplies. However, given the way Justice Kulkarni chose to frame the issue some of the Constitutional questions raised by the petitioners remain unanswered or unsatisfactorily resolved. For example, we are unsure of the applicability of Articles 249A, 269A, and 286 to GST legislations and how the three vital Constitutional provisions interact with each other. Neither do we have a clear view as to the aforesaid Constitutional provisions constrain the Parliament or otherwise the scope of their influence on GST laws.     

[1] Dharmendra M. Jani v Union of India 2023 SCC OnLine Bom 852. 

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